State drops complaints against Shepherd's

State drops complaints against Shepherd's

February 24th, 2011 in News

The Missouri Department of Labor and Industrial Relations has dropped its two-year investigation of prevailing wage law complaints against the Shepherd's Co. of Fulton, a faith-based construction company.

Shepherd's Co. also operates as a window cleaning firm and does business in Fulton, Jefferson City, Columbia, and the Lake of the Ozarks. It has more than 2,000 commercial and residential accounts in Central Missouri.

The state agency has reached a non-monetary settlement with Shepherd's Co. Under the settlement, the Missouri Department of Labor and Industrial Relations admits its long and costly investigation of the Fulton company failed to find any violations of state prevailing wage laws.

Tom Mahaney, Shepherd's general manager, said last year the firm had expenses and lost business costs of at least $1.5 million that are associated with the state agency's investigation of the firm.

Scott Charton, a spokesman for Shepherd's, said he believes total expenses for the firm, including costs associated with forming a new company and legal costs, eventually will total more than $2 million.

The settling parties admit to no violations of state or federal law or authority in the agreement, Charton said. The settlement agreement provides that no notice of violation of Missouri's prevailing wage or minimum wage laws will be made by the department on Shepherd's projects that have been under investigation.

Shepherd's Co. issued a statement saying that the "essential faith underpinning the Shepherd's Company partnership has not changed, nor will it change. Shepherd's Company is hopeful the settlement with the state satisfies any concerns or possible concerns that any public governmental bodies may have, or have expressed in the past. In the spirit of Christian forgiveness and fellowship, Shepherd's is moving on, and looks forward to continuing its high quality service and workmanship for all clients, private, corporate and governmental."

Shepherd's will continue operating as a partnership but will also form a separate corporation that will be used to bid on government contracts that are covered by state prevailing wage laws.

During the investigation, Labor Department Director Larry Rebman had written letters to Columbia Public Schools and the Missouri Department of Transportation telling them that the firm was the subject of a wage hour violation investigation. That prompted both government agencies to discontinue projects with Shepherd's.

After asking for extensive records from the firm, Shepherd's Co. filed a federal lawsuit against Rebman and Carla Buschjost, director of the department's Division of Labor Standards.

In their federal lawsuit against the state agency, Shepherd's Co. accused the state agency of not providing due process to the company under the U.S. Constitution.

Based on unnamed complaints, the state agency began the investigation in 2009 that Shepherd's Co. was outbidding union competitors. The state asked Shepherd's to turn over virtually all of its financial records, customer lists, payroll records and numerous other documents.

Shepherd's fought the requests for a year and then turned the records over in 2010. It later filed the federal lawsuit against the state agency.

Mark Comley, a Jefferson City attorney representing Shepherd's Co., said Wednesday as part of the settlement he has dropped the federal lawsuit.

Comley said the company is now organized as a general partnership. Comley said as part of the settlement agreement, the firm will become a subchapter S corporation.

"That will create a better paper trail for payroll and record keeping. Shepherd's Co. has agreed to do this as part of the settlement," Comley said.

Shepherd's Co. is operated by Shepherdsfield Community, a faith-based group that lives in a communal lifestyle. Members of the community voluntarily contribute their earnings to the community and they all share in proceeds from business ventures.